Bloomberg News

Google to Charge Retailers for Product-Search Placements

June 01, 2012

Google Inc. (GOOG:US), in a bid to boost revenue, is overhauling its online product-search service to include only items from merchants that pay to be included in search results.

The company is moving to a paid model by the fall and will call the new search tool Google Shopping, Sameer Samat, a Google vice president, wrote in a blog post yesterday. Ads from the service will appear on Google.com’s main search engine and be labeled as “sponsored,” he wrote.

“Having a commercial relationship with merchants will encourage them to keep their product information fresh and up to date,” Samat wrote. “Higher quality data -- whether it’s accurate prices, the latest offers or product availability -- should mean better shopping results for users, which in turn should create higher quality traffic for merchants.”

Google, under Chief Executive Officer Larry Page, is seeking to increase ad revenue by doing away with a service that now drives traffic to a company website for free. Retailers spent $7.1 billion on online ads last year, more than any other industry, an increase of 29.1 percent from 2010, according to the Interactive Advertising Bureau. The move marks a shift for a company that once eschewed requiring payment for inclusion in search, said Danny Sullivan, a Web-search analyst.

“Eight years ago, Google viewed paid inclusion in general as some type of evil the company should avoid,” Sullivan wrote on his searchengineland.com blog. “What’s happening with Google Shopping is classic, textbook paid inclusion.”

No Payments

Web users can search for products on the current version of Google Product Search by typing the name of a product into the Google.com search bar and clicking on a “Shopping” link to the left. The results page displays items from online stores that have given Google a data feed of their merchandise using a free tool. It lets users rank a product by different criteria, such as price and stores where it can be bought.

Google offers free applications for its Android smartphones and Apple Inc. (AAPL:US)’s iPhone that let users photograph a barcode to get price comparisons from online and local shops. A representative of Mountain View, California-based Google didn’t immediately respond to a request for comment about the future of those programs.

In its 2004 initial public offering letter, Google said the company wouldn’t accept payment for including specific search results.

“Our search results are the best we know how to produce,” Google co-founders Page and Sergey Brin wrote in their letter to prospective investors. “They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating.”

Google fell 1.6 percent to $571.52 at 9:43 a.m. in New York. The stock had dropped 10 percent this year before today.

To contact the reporter on this story: Mark Milian in San Francisco at mmilian@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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